Freightlink must survive but Toll will not buy: Little

Toll Managing Director Paul Little says banks are asking too much for embattled rail freight carrier Freightlink

By Brad Gardner

Toll Managing Director Paul Little says it is vital Freightlink survives but argues the banks are asking too much for the embattled carrier.

Toll, in a joint-venture deal, earlier this year made a bid for Freightlink because of the importance of the Adelaide to Darwin railway to Toll’s freight forwarding operations.

Little says Toll is the largest freight forwarder up through the centre of Australia and as such relies heavily on Freightlink’s services.

However, Toll has refused to pay the asking price for the freight carrier because it considers the price tag is not worth what it cost to build the rail infrastructure. As such, its bid was rejected because sale advisers UBS considered it undervalued the rail operator.

"It had cost the commonwealth and the shareholders involved in the building of rail in excess of a billion dollars and our view was it wasn’t worth anything like that," Little says.

"We did make an offer along with some join-venture partners to put our hat in the ring so to speak but with no real expectation that number was going to be successful, nor was it," Little says.

"The opportunity to acquire Freightlink was a very dubious opportunity in many respects because it was fairly commonly understood the banks needed to get in excess $300 million for that asset."

Despite ruling out another bid, Little is hopeful the eventual buyer offers Toll the stability it needs so it can continue its freight forwarding business along the rail line.

"We remain very keen to understand who will own and manage that business because we are the largest freight forwarder on that route," Little says.

Freightlink on May 19 called for expressions of interest in the company.

In announcing the company was going up for sale, Chief Executive John Fullerton claimed the rail carrier achieved significant growth in a short period of time.

He says it is well positioned to expand its activities along the Adelaide to Darwin rail corridor.

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